In the past several months, a surprising number of real estate agents and brokers have narrowly averted a financial scam by recognizing that the buyer lead they just received is likely too good to be true — in fact, it’s a scam.
The “buyer” in the cash-buyer scam doesn’t intend to purchase a property. Although you don’t realize it at the time, they are lulling you into helping them load their getaway car with money from your account.
How does that happen? The buyer at some point will likely send a phony cashier’s check, not drawn on legitimate funds, or a bogus check that appears legitimate.
Shortly after that, they identify they’ve made an error in the amount or the account it was sent from and ask that all or a portion of the money be returned to them out of your trust account.
To help resolve this problem, the unsuspecting broker sends money from the brokerage company trust account, only to later find that the funds received into the trust account weren’t legitimate — days later when the international cashier’s check is processed.
It’s only after the getaway car has driven away that the broker realizes he or she inadvertently helped the thief put the money in the car.
But this is preventable; here are five signs your new lead on a cash buyer might be too good to be true and might, potentially, be plotting a heist.
1. Buyer is taking an inexplicable blind leap
The buyer is living or traveling out of the country, and for some unidentified reason, he or she wants to buy a property in your state, sight unseen, without appearing to have any familiarity with the neighborhood or even the city in which they wish to purchase.
Even more telling is the fact that, unlike most other buyers you’ve worked with, this buyer doesn’t appear to want to know much about the property, the community or anything else the average buyer inquires about.
2. Overeager to share financial details
Your cash buyer is more than happy to share their financial details over email, including sending financial statements or bank account records.
Often they will send a bogus though perhaps almost believable record of their banking statements or other “proof of funds” before you’ve requested it. And the buyer sends it despite the fact he or she has never met you, had a conversation with you or asked about the process.
3. The storyline fits a mold
In an array of scam emails, the would-be buyer is originally from a country in Europe or Asia, and they happen to be away from their home when contacting you, but they aren’t in the U.S. (often the story suggests they are in Canada, for whatever reason).
Who knows why the story has so many twists and turns, but sometimes they throw in a detail about jet lag, time zone changes and some other complications to make you believe having a phone conversation with them can’t be easily arranged.
4. Wealthy, trusting and not well-connected
Despite being a world traveler with self-reported wealth and success, the buyer is willing to trust an agent he or she has not conversed with who was found on the Internet and not a referral.
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They not only trust that agent to lead them through the purchase of a home they’ve never seen, but they would like that agent to recommend and engage an attorney to provide additional help.
Although all of this is possible, it’s harder to believe when coupled with the other facts.
5. Ready to send money, before it’s necessary
Typically, buyers are not ready to part with their money in a home purchase until it’s necessary. Yet this cash-buyer scam regularly involves a buyer who asks if they can send a cashier’s check with a down payment or earnest money to a broker or law firm trust account before anyone has asked the buyer to part with their money.
Although jewelry heists and bank robberies make compelling movie scripts, some financial scams in the Internet age are more sophisticated, as they prey on those who are trusting and eager to help.
In the “cash-buyer scam” there is no masked man demanding money or a curbside getaway car poised to make a quick escape. As a result, the scammed real estate professional doesn’t always see that a robbery is imminent and preventable.
After seeing the scam run its course, it is easier for a real estate agent or broker to look back on the storyline and recognize the warning signs. Hopefully, you’ll recognize the signs before it is too late.
Brad Boyd is an attorney with the Fafinski Mark & Johnson law firm in Eden Prairie, Minnesota. You can follow him on Twitter or on LinkedIn.
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